Since 2015, legislative officials of Boston have been developing legislation concerning residential evictions in the city. Even though that legislation has failed to advance in the Massachusetts legislature, its proponents continue to work on a revised version for 2019. Residential real estate values are likely to be affected whether or not the bill is ultimately enacted into law.
Boston Apartment Market Background
Boston’s soaring real estate market has increased the demand for affordable residential units and reduced their supply. The average apartment rental rate in the Greater Boston area rose from $1,752 in 2015 to $2,152 in 2018. While apartment construction is increasing, much of that new supply is aimed at prosperous young professionals. Developers are buying up older housing stock, in anticipation of redevelopment. Consequently, tenants in those older buildings have limited options, with their rents rising sharply until the buildings are demolished for reuse.
In 1994, a coalition of Cambridge landlords led a successful referendum to have rent control banned in Massachusetts. The landlords claimed that existing rent control suppressed new multi-family residential construction; 51% of the state’s voters agreed with them. This belief was vindicated by following years’ construction: from 1998 to 2001, 2,569 multi-family residential permits were granted in Boston compared with 420 from 1991 to 1994.
Eviction Legislation History
The growing loss of affordable housing in 2015 caused Boston neighborhood activists to press for legislation to extend renters’ rights. A proposed ordinance would require landlords to report tracking evictions, only evict tenants for a few specified reasons, and engage in non-binding mediation with tenants for any rental increment beyond 5 percent. No city councilor would sponsor the legislation, primarily because it appeared to reinstate rent control.
The housing reform bill was again proposed in 2016. Supporters of the legislation dropped the mediation requirement from the 2015 proposal. Boston landlords continued to oppose the legislation; they claimed the reasons for their objection were the costs of reporting and the possibility of being targeted by advocacy groups when reported evictions were made public. Once again, this proposal did not advance.
In 2017, another rental reform package was proposed. Part of that package was the ‘Jim Brooks Community Stabilization Act,’ named after a late Boston social justice advocate. The act would require landlords to report evictions, but it would prevent those data from becoming public. City officials could then present soon-to-be-evicted tenants with legal and relocation aid. But the act did still include a list of specific reasons—or ‘good causes’—under which landlords could begin eviction proceedings. Subsequently, public hearings were held by the Boston City Council Committee on Community Relations. After the proposed act was strongly opposed by both landlords and some tenants, it was referred back to committee.
An amended version of the act was passed by the Boston City Council in October 2017. Most of the provisions of the 2015 proposed act were gone. The approved act only requires landlords to notify the city of evictions and allows the city to inform tenants of the tenants’ eviction rights.
Because Boston is a home rule state, the act was presented to the Massachusetts legislature in January 2018. The bill was sent to study in May 2018, thus, effectively killing it. Legislators rejected the act because, as presented, they weren’t allowed to amend it. Also, they were aware that landlords and real estate developers viewed the bill as the first step into reenacting rent control.
2019 Proposals on Boston Tenant Rights
Boston Mayor Martin Walsh released his current agenda for the Massachusetts legislature on January 7, 2019. His list includes three proposed acts to help residential tenants facing eviction. The first act would provide certain low-income tenants facing eviction with court-appointed attorneys.
The second act, focused on Boston’s elderly population, resembles the 2015 proposed tenant protection legislation. It would prohibit ‘no-fault’ eviction of anyone over 75. Landlords would be required to provide notice to the local community at the same time the eviction notice is served to the elderly tenant. Eviction would only be permitted for good cause such as failure to pay rent, damage to the property, or use of the premises for illegal activities. Rent increases would be limited to five percent per year for tenants aged 75 or older to prevent landlords from using large rent increases to get around just cause protections. This would apply to all properties with six or more rental units.’
The third act would give tenant associations of multi-family residences larger than five units the right of first refusal to purchase those residences at fair market value. This would provide tenants with the ability to match any bona fide offers on buildings including their apartments.
Effects on Residential Rental Property Market
All three of the proposed acts are currently in committee; their eventual disposition is uncertain. In the short term, that uncertainty could cause Boston’s residential real estate investors to hold off any purchases until the legislative issues are clearer.
If the bills behind these proposed acts become available for comment, there is likely to be heated public reaction. Landlords and real estate investors will undoubtedly object to the public release of eviction notices, the effective brake on rental rates, and a list limiting just causes for evictions. All of these would increase management and ownership expenses. The five-percent rent raise limit would reduce potential gross income and suppress new investment. Current and potential investors in Boston’s multi-family residential market should stay alert to news about these and other proposed legislation. Trade organizations and well-informed sales professionals will be especially helpful in keeping investors up to date on legislative actions regarding this bill.